A SALT on real estate? Housing market and migration responses to the limit on the state and local tax deduction

Lawrence M. Kessler and Donald Bruce

Contemporary Economic Policy, 2024, vol. 42, issue 4, 683-704

Abstract: The 2017 Tax Cuts and Jobs Act placed a $10,000 limit on the deductibility of state and local taxes (SALT) for federal tax purposes. This policy change likely increased the cost of home ownership for some households in high‐tax areas. We examine whether these costs were capitalized into the local housing market through slower growth in housing prices. Motivated by the argument that the SALT cap caused some taxpayers to relocate, we also examine whether the cap influenced interstate migration patterns. The cap led to a sizable reduction in home price growth but had no discernable impact on state‐to‐state migration.

Date: 2024
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https://doi.org/10.1111/coep.12659

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Working Paper: A SALT on Real Estate? Housing Market and Migration Responses to the Limit on the State and Local Tax Deduction (2022)
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